How layoffs at Google could affect enterprise cloud services

An investor with a $6 billion stake in Google parent Alphabet is calling for more layoffs at the company, although it has already cut 12,000 jobs.

The managing partner of London-based TCI Capital Fund Management wrote to Alphabet’s chief executive, Sundar Pichai, asking him to cut thousands more jobs and to reduce the compensation of its remaining employees.

Alphabet already plans to cut its workforce by 6%, it said on January 20, 2023, a move that will affect staff across the company including in its enterprise cloud computing division.

This is the second time that TCI’s managing partner Christopher Hohn has written to Alphabet. In his first letter to Pichai in November he asked the company to take aggressive action to correct rising headcount, employee compensation and operating losses in the company’s Other Bets division.

His second letter, written on the day Alphabet announced the layoffs, argued that the company should reduce its cost base further by cutting its workforce back to the 150,000 it employed at the end of 2021. Before the recent round of layoffs it had 187,000 staff.

However, the possibility of further job cuts at Alphabet has sparked concerns it could affect service in such as Google Cloud, one of the company’s more profitable and fast-growing businesses. In October 2022, Google Cloud grew 38% year-on-year to reach $6.9 billion in revenue, while Alphabet’s overall revenue growth slowed to 6%.

Copyright © 2023 IDG Communications, Inc.

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